As we often say, it’s a good idea to pay attention to insider buying.
On May 27, we noted:
“Oversold, Advanced Micro Devices (AMD) is just starting to pivot higher. Helping, Phil Guido, AMD’s executive vice president and chief commercial officer, paid $500,000 on Feb. 7 for 4,645 shares, an average price of $107.56 each. This was the first insider stock buying since November 2012 when CEO Lisa Su paid $98,400 for 48,000 shares at an average price of $2.05 a share.”
At the time of that note, AMD traded at about $113.
Today, AMD is up to $156 and could soon retest $175.
With AMD, we have to remember the company is exposed to a multi-billion-dollar addressable market for data center AI chips. In fact, according to company Chair and CEO Lisa Su, that addressable market for AI chips will reach $500 billion by 2028, which is up from her prior estimate for $400 billion by the time 2027 rolls around.
“This is roughly equivalent to the annual sales for the entire semiconductor industry in 2023. Su is optimistic about the long-term market size potential for AI chips, and believes that AI demand has exceeded the company's expectations over the past year,” as noted by Barron’s.
Also, the company’s latest generation of AI chips, the MI300, is its fastest ramping product ever. Lisa Su added that AMD’s MI300X chip—which rivals dominant AI chipmaker Nvidia’s H100 is “the most advanced AI accelerator in the industry,” as noted by Time.com.
Helping even more, President Trump just lifted his ban on artificial intelligence chip sales to China. Plus, as noted by Seeking Alpha, “the company stated that it will resume shipments of its MI308 chips to China after receiving the US government approval. The California-based chip company’s spokesperson told Bloomberg that the U.S. Commerce Department has informed the company that license applications for its MI308 would move forward for review.”
But wait, there’s more.
Analysts at HSBC just upgraded the AMD stock to a buy with a $200 price target. The firm believes AMD’s MI350 chips could challenge Nvidia’s Blackwell chips at less cost.
In short, even after an incredible rally earlier this week, AMD still has plenty of upside.
Recommended Article: Buy or sell NVDA? Here’s what I’m doing (unusual recommendation)
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Written by Ian Cooper